MoJ seeks evidence on how to curb exploitation in housing disrepair claims with potential reforms
The Ministry of Justice (MoJ) has opened a call for evidence on the possibility of banning referral fees in housing disrepair cases, as part of a broader effort to tackle unscrupulous behaviour in the sector. The government is also considering raising the small claims track limit for housing disrepair cases in an effort to reduce costs and improve fairness for tenants seeking redress for poor housing conditions.
The MoJ’s consultation follows concerns that some solicitors and claims management companies (CMCs) are not acting in tenants’ best interests, particularly in cases of housing disrepair. In some instances, tenants may be subjected to unclear costs or exploitation by unscrupulous firms that encourage claims that may not be in the tenants’ best interest. These issues often involve tenants being pushed into unnecessary claims, where they are unaware of the risks, such as having to pay court fees or the landlord’s legal expenses if the claim is unsuccessful.
The government acknowledged that claims management can play a valuable role in connecting tenants with legal remedies, but it also noted that vulnerable tenants are sometimes exploited by unscrupulous practices. One potential reform floated in the consultation includes banning referral fees. Referral fees are currently a common practice where solicitors pay CMCs for sending them clients. The MoJ argued that banning referral fees could lead to tenants being referred to solicitors who are best suited to handle their claim, rather than simply the firm willing to pay the highest referral fee.
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The government is also considering raising the small claims track limit for housing disrepair claims, currently set at £1,000. The idea is that by bringing all housing disrepair claims into the small claims track, the cost burden would be more balanced between the parties. It is hoped this change would prevent unmeritorious claims, which some argue are brought because the risk of fighting the case outweighs the cost of settlement.
Laura Coyle, co-chair of the Housing Law Practitioners Association (HLPA), criticised the consultation for not addressing the role of legal aid in housing disrepair cases. She pointed out that since the Legal Aid, Sentencing and Punishment of Offenders Act 2010, legal aid for housing disrepair cases has been unavailable for bringing action for damages. This has pushed many vulnerable tenants into the hands of CMCs and firms that exploit their situation.
Coyle argued that the real solution to the problem is reintroducing legal aid for housing disrepair cases. She and others have repeatedly called for this change, and Coyle believes the government should listen to those calls.
Research by Manchester law firm Pabla & Pabla has shown a dramatic rise in housing disrepair claims against local councils, with the number of claims increasing nearly fivefold this decade. Jacob Poole, housing operations co-ordinator at Pabla & Pabla, welcomed the government’s consultation but stressed that housing disrepair claims are complex and involve the most vulnerable members of society. He urged the government to ensure that any reforms prioritize the tenants and do not jeopardize their access to justice.
The government is seeking responses to the consultation by 12 February 2026. The findings will inform whether changes are necessary to curb unethical practices in housing disrepair claims and ensure tenants are treated fairly in the legal process.